tv Street Signs CNBC February 13, 2013 2:00pm-3:00pm EST
sngs welcome back to "power lunch." i'm seema mody. big mover is amazon.com. up 3.5%. strait of juan de fu striking a deal with cbs. social media as a pack. take a look at facebook. leon cooperman revealing his stake in the stock. stock getting upgrade to buy at stern ag. analyst saying we have greater to execute nationally. take a look at rack space. bottom line came in inline.
but top line slightly like and that's why the stock is getting hit. simon, back to you. >> thank you, seema. we are standing by for cisco to report its earnings after close tonight. and john chambers will be on closing bell at 4:00. i would describe that market, tyler, as essentially hanging on to the rally taking us up, 6, 7% so far this year. big moves, and kind of still are. >> thank you very much, simon. take a look, if you are near rim stock right now. actually blackberry. reports anecdotal of black-outs with that company. so if you have trouble with your blackberry, that might be why. >> "street signs" begins right now on cnbc. >> tortoise, one, hare, zero.
well ask if the best action is no action. the call for infrastructure is investment. he is right, we need it. but how do we afford it? and more and more of your money going to things like healthcare. why is so much housing data seem to change almost every time we get it. and jay wells getting the hit on. mandy? >> in the meantime, by now, you hopefully know that despite the fact that we were mixed today, we are nonetheless still scaling high. the dow about 1.4% of its all time closing high. back on october 9, 2 0u 7. s&p is within 2.9%. nasdaq nearly 14% above its close of october 9, 2007. record close during the tech bubble. but depending on how the rest of the day's trading goes, folks, nasdaq could finish at its highest since november 2000. despite strong gains in the last ten months. financials are still down 50% from levels due the market peak of '07.
let's get straight to the floor and see what is going on here. courtney reagan is on the floor and rick santelli at his perch in washington. courtney? >> it's been a push-pull kind of market day. we hit the high we hadn't seen on the s&p since november of 2007 only to start to pull back from there. we went negative, how we are slightly positive again. ge news, topic of wul street and moving other multiindustry names. take a look at textron. you can see deals can be done for the market and players involved. however, not all positive. aerospace and defense, weak as a group. nearly across the brd today if you look at some of the movers, lockheed down a half percent and some others right around the same. last but not least, housing stocks. i know you watch them mandy and we all watch them closely.
they continue to move higher in the momentum we have seen the last couple of days. weakening a bit, hgx hit a new 52-week high. we watch action from here. mandy? >> pretty much, groundhog day. rick santelli, are things looking as they were in the beginning of the day. or has there been action in your pits? >> we are seeing rates creep up a bit. we could have a new high closing yield as we sit at 203, 201 is the number thursday far going back it april. but i'll tell you what, an adage, old trading adage. plan your trade and trade your plan. the reason i say that is that i think the dow will punch through all-time highs. i think the momentum style of trading this day and age will propel it. get ready. i think interest rates at that point will give you a chance to see higher rates maybe it buy into treasuries. but i say get prepared for it. because i've never really called for a stock direction since '09. i have a feeling due to technical reasons, that if we
start it see a move going through 14, 164, i do believe there could be a correction as we get to johnny come latelies. >> get your plans ready. as boy scouts say, be prepared. thanks for the prediction, rick. >> let's's move into rick's pits and talk about childhood stories. you know the fable, right? slow but steady tortoise, beating the overly quick but overly confident hare. remember lightning? there he is. that race provides a lesson. but does that translate to the stock market? looks like it may. if you remained invested in the market through the pain, you have likely come out ahead. the question is, what do we do from here? let us bring in mark travis. and pete, from huntington asset advisors. mark, you've got kind of an interesting and maybe take on this, which is this. if you are always fully invested, it means there is a
derth of opportunity out there. why? >> the way i see it, brian, is to be fully invested today is to assume there is no better opportunity tomorrow. i think for a term like intrepid capital, that is sensitive, tends to play on the less liquid parts of the capital markets. small cap and high yield debt. it is imperative for us to have cash. and real valuation discounts appear. you have to make two trades. sell something in a difficult environment and acquire something else. so having some residual cash is always worked well for us over time. >> okay. i will push back on that a bit, mark. a lot of people sold in the downturn. who can blame them? i'm talking about both down turns in the internet bubble and final crisis. those people have less in terms of stocks and those who stuck it out even stayed in the race, slow and steady. >> i'm not going to argue with
you, brian. i like to say that most people are hard wired at birth to unfortunately buy high and sell low. and when the volatility appears, is when the best opportunities present themselves. so we stand ready and we didn't suffer in the tech bubble, frankly. so frankly, because we were valuation sensitive. we weren't going to pay, 30 times sales or you know, 50 times for a business that may or may not be growing. that's not what we do. >> pete, is it becoming harder and harder to find discounts and bargains as we reach the heights, or are they still out there? we saw an amazing stat and that's that we are near record highs. seems that only four sectors are in positive territory. since those record highs. in other words, gains have been extraordinarily narrow. >> that's true, mandy. that's what our view has been
and what we think we get paid to do as professionals, to decide when to sell and to the point, that rick santelli made, the mark set driven by momentum. our gel is to basically figure out when momentum no longer makes sense and rotate into where we think the opportunities are. right now for us, we are bailing out of consumer stocks rapidly and getting into early cycle stocks. energy, materials, agriculture, we think they have pricing power and we think the economy will slow here. we are setting ourselves up tore next recovery and acceleration. we want to be positioned for that. >> in early cycle sectors you've just mentioned, pete, are there any specific stocks you would like us to know about? >> absolutely. agriculture is a growth industry. if you look at lindsay and belmont that make irrigation systems and agco makes farm equipment. all seeing the benefits of strong farm income. so there's an area where it is a pure domestic story.
no political risk. and growth industry. we want to be positioned into those. they are boring. they are things people overlook for years. but that's where the opportunities exist. >> give us a name or two also that our viewers can hold as a tortoise stock, if you will. >> we specialize in boring, brian. >> that makes two of us. >> we peddle boring. as long as it makes us money, who cares. >> exactly, mandy. we have talked about before big lots. ticker big. so that's easy to remember. we think it is low 40s. it is in low to mid 30s now. they have acquired a new company and are trying to rebrand it. we think there's an opportunity there. the company bought back a billion dollars worth of shares in the last three calendar year
on a billion six market cap. the other name, believe it or not, goes back to 1871, to show you staying power, is western union. they have 500,000 outlets for people transmitting cash, which it is interesting to see whether migration will come into this country, or leave this country. >> okay, mark, let me jump in on that one for a second. isn't there an immigration play on this one as well? because if there is an immigration legalization program, right, you may not see as many people sending money back at what some would argue are overly high fees that western union charges to their familyes. if they are table come here or be here more on the up and up and use traditional banking. >> that's been presented a as bear case, brian, unequivocally. the viewer on with me mentioned the economy reaction sell
rating. i'm still waiting for it to accelerate. i didn't know 2% was a fast rate of growth. i think we might see out migration as people leave the country to find better opportunity. but i think the biggest problem western union faces is like all big business with politicians. in terms of transferring money back into mexico or vietnam or wherever it may be. we shall see. but the cash flow supports a higher price than they traded for today in our conservative estimate. >> to round out the tortoise and hare analogy, pete, even though, little by little, steady as she goes, is there a danger, do you see anything on the horizon, in which case it would be a hare to the down side? >> oh, clearly, mandy. what we have seen is the repay tree asian of a lot of tax selling late last year and not a major shift from bonds into stocks. just cash that went outcoming
back in. we have seasonal effect. 401(k)s. people funding those. when that money flow drys up, that old adage, selling and go away, may be true this year. as earnings slow faster than we forecast, you could clearly see the momentum cut out. if it cuts out, down side as you pointed out -- >> so may is the month you are looking for as risk month, pete? >> again, we think it mihappen earlier than that. when we get into march, you will get reannouncements coming out. if the trend is negative, you want to be defensive at that point in time. that's what we try to set up for is that defensive posture. get away from high flyers. >> peter and mark, thank you very much. have a great day, see you soon. on deck, guess the one word that dominated last night's state of the union address. and there is one word the president barely said. what it was and why you need to care about it. >> and later on, the ss gross.
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time warner is in communication to sell some time inc. magazine assets. the idea would be to sell off some of the more profitable magazines. people magazine, real simple, as well as big thick magazine, instyle. the big question here is who would be the real potential buyer. i'm hearing that herst is not interested and that news corps would be a departure because they don't own a big magazine business currently. the key question is whether condi nass, owned by advanced publications, and in 2010 they raised $500 million to special specifically onon m & a. so andrew seagull has a $500 million woar chest and hasn't spent much of it. when we did an exclusive
interview last week, they said they are open to the possibility. this is just very preliminary talks. but mandy, things are for sale at the right price. >> thank you for that, julia. right now, session lows, sharon epperson, to what degree is this due to ties or headlines out of iran? >> i don't know how comforting they are. oil did drop below $97 a barrel here after we saw the headlines from iran saying they agreed on some point, some points in quotes, with the u.n. watch dog. national atomic energy agency in terms of nuclear talks they've been having. trades have been watching to see what would come out of talks. right now it appears the talks will continue. but the fact that they seem to be at least willing to have discussions here, this is seen as bearish and taking the prem yum out of marketplace. that's why traders say we are
looking at oil. wti price at session lows. . it is basically down on the session. this is an interesting development. we will have to continue to watch to see what occur here's and whether iran is truthful and will continue to talk and has in fact agreed on some points exactly what those points are remain to be seen. >> oil back in the news in big way. sharon, thank you very much. >> sure. >> meantime, we brought down president obama's state of the union speech last night. the buzz word, probably no surprise, was jobs. but another word he barely mentioned, was infrastructure. saying that just three times over the course of the hour-long speech. >> and given bad roads and possibly even dangerous bridges around america, isn't this something that every american should have an interest in? in other word, shouldn't it get more attention? joining us, an expert on this. barry, good to see you again.
>> good to see you both. >> bridges and roads are in terrible condition. possibly even dangerous. don't need to be reminded what happened in minneapolis a number of years ago. but can we afford it? how do we do this? >> we can't currently afford it in this country ppt. the numbers are staggering. it is difficult for politicians, let alone the average person, to comprehend it. take for instance. to maintain our road between now and 2020, to modestly improve our infrastructure will take $2.75 trillion. if we take what is currently expected to be funded, we have a shortfall of $1.6 trillion. these are unimaginable numbers? soz what do we do? too bad, we can't afford it? we have to do something. >> because we can't have further deterioration in our road, airports, ports, bridges, dams, we can't afford that.
but we are losing competitiveness domestically and overseas. we've got to understand that there is a price to be paid to remain competitive. that price is going to include, if we're not going to raise the federal gas tax, if politicians find that -- >> but i'm not going to defend politicians, but i'll say this. i had my third flat tire in four months this morning. because the potholes out here. i'm lucky, i'm in a position where i can go out and buy a new tire. a lot of people aren't in that position. but if you say you want it raise the gas tax to repave the roads, people also scream. don't we spend more patch work, fixing and fixing problems like i had this morning -- and i hate taxes as much as the next guy -- nudge up taxes to get this stuff done? >> this is a tax, that however we got to phrase it, whether you call it congestion pricing, whether we say those who use the
roads subsidize. those who don't use the roads, we have to understand we can't dance around it. the subject is too great. and the need is even greater. >> what about bringing in private money. if we haven't got public money, what about public/prief art partnerships even. >> these are imperative today, because of the short falls ways talking about. private investment in the form of public/private partnerships will become imperative. there are hundreds of millions of dollars waiting to be invested in the long-term leases of airports, roads and bridges. but today the current environment -- >> but people also freak out, right? if you sell a toll road in indiana, or the dan ryan expressway in chicago, what's to stop the private owner from just jacking up tolls every year and nothing -- at least politicians theoretically have some accountability with the public. >> what i've been calling for around the nag is the model
system for developing public private partnerships that protect all of those interests and at the same time, allow those who will invest a fair return. if we can find that model and it is possible because public-private partnerships are used all over the world, we will be able to take that money ease and use it properly. >> what is it going to take to actually get something done here? god is forbid another accident like bridge collapsing. >> we have had nearly 600 bridge failures in the country. when the minnesota department of transportation, turned down, at the recommendation of their consultants, spending $11 million on the bridge one year before it collapsed within the federal government sent out $235 million for a new state of the art bridge. we have nearly 8,000 similar bridges across this country just like the i-35w and every
knowledgeable bridge engineer says, they are going to fall. >> comforting thought, ma. appreciate you lifting our thoughts. >> well, we may need a czar to take control -- >> i'm voting for you, brian. bare barry, thank you very much. your hard earned miles could be in jeopardy. how to protect your point, ahead. >> and at the top of the show, jane wells. >> brian, drive one of these own you won't have a problem with the potholes. drought schmout. . i'm a conservative investor.
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so, we can work anywhere. anywhere? sure - on the beach, in the woods, at the lake. what about on the green? let's not get ahead of ourselves. oh!!! we're going to take you way back. 55 years in fact, on this day in 1958. ford introduced a newer version of the t bird called the square bird. it was considered to have upgraded the car from sport to luxury. it is the epitome of the '50s. and you know, mandy, that herb greenburg went to the drive-in
with his arm around his sweetie, and that's about all i'm going to say. >> probably picked this to support this. >> black and white pictures. >> from t-birds to tractors, let's drive on down to the farm and check out hard money in action. jane wells is at the world ag expo. jane, you're having all of the fun out there. >> yes, i am. i always do. i like big wheels. i like big toys and they've got the biggest ones here this week in california. farmers are figuring out how to buy their hard-earned cash for new machinery after the they are planting like crazy. there were concerns about construction site but the ag business is quote white hot. and all of the aq equipment makers are watching farm incomes which the usda said will hit a record $128 billion this year. >> our number one correlated thing, jane. if we look at net farmer income,
that is primary driver of farm equipment purchases. so we would anticipate that 2013 will remain a strong year. >> we came out of 2011 with a strong year and we were fully expecting 2012 to be similar and exceeded. i think we thought the market would be flat in my area on big tractors. the market is up 12%. >> i think thissier a year and forecast for my business, i have 2 to 5 to 7% increase. >> still growth but slower growth. spend it while you got it. in 2014 they could fall as much as 30% guys, because they think grain prices will come back down. >> thank, jane wells. in the meantime, we debate too much after good thing in housing. >> later on, groupon gets its own daily deal. believe it or not, an analyst that upgraded stock.
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first up, we have cliff's natural, which is maybe a contender. >> yes it is. many charges, revenue down. iron ore prices are weak. here is the problem also. the company will sell more shares and nobody expected that and cut revenue by 76%. downgraded by deutsche and others. cliffs getting walloped. >> missed here on eps and revenue, also weak guidance for the full year. current consensus, 320. company sees revenues just under 6 billion. also, below current consensus, though unclimb cliffs, dr. pepper, snap el didn't increase dividend by 12%. >> i'm done with the stocks moving low. let's find one that is booming and it is trila.
>> huge move. housing relating play obviously. reporting a loss last month. but current estimates within raising to a buy. raising target as well. 32 o from 28. we know it has come way nicely back from the low around 15 bucks a share. zillow, single z, also rising. >> subscribing to the mandy school of grammar today. >> is that what i said? >> a portfolio solutions, otherwise known as a company we have not heard of. >> bring one of these names out. that's street talk. helps mortgage services an companies, technology solutions, blah blah blah. earnings are solid. they are also buying units from a company we talked about recently. >> not new zealand and not the town of auckland, but auckwin
financial. >> that stock is up 8.5%. >> groupon, finally get be an upgrade. >> yeah. listen, this stock is well off its high. but stern ag we soog seeing them up ahead. buying with an $9 harvest. this is an out of consensus upgrade. this is not a call on the quarter. he actually put that in bold on his note. he said this is more after constructive longer term view of the company because, in a nutshell, they are moving away from e-mail that you've got read search based result. he said they may even be early. so credit to you, time on the table, but upgrading tock and it is moving today. >> we appreciate his honesty. in the meantime -- >> yeah, let's welcome to the show. spencer. deputy bureau chief. could be the first of many visits. >> we'll see.
>> depends on how this goes. >> yeah. >> how are you feeling now, by the way. >> i work every a lot of pressure everyday. >> he works at the journal. this is easy for him. you wrote a fantastic piece, and i say fantastic in its disturbing nature, which is about the millions of americans getting free phone service that have been kicked off the rolls because they couldn't prove they were eligible or didn't respond. >> yes. >> this should be an american outrage. >> yeah. a story about a well intentioned government program that went off the rails. this program was created in 1984 under the reagan administration and the government was concerned that when at&t broke up that phone rates would go up and poor people couldn't afford phones. they said, let's create a subsidy to help them get phones. now cell phones are the big thing so cell phones are allowed on the program. but the rules they wrote were just horrible. when you went up to one of these phone stores or a community fair and they said, you want this phone? all you had to say was, i am
part after government assistance program. >> you didn't have to show. >> you didn't have to show any documentation. after you became a subscriber, they didn't have to recertify you were still on the program. so it basically got abused. >> easy to get in. and once you were in -- >> hard to get out. >> but this is drn -- >> is largely paid for by other taxpayers. >> paid for by people like you and me. if you look at your phone bill and you say, what is this fee? universal fee? that pays for a number of programs, including lifeline. the cost of the programs have began up a lot. a couple years ago like $800 million. last year the program was spending $2.2 billion. >> so what happens now? rules changed. rules have tightened up so that those currently subscribing have to prove they can qualify. but a lot of them didn't
respond. so did they have to give their phone back? >> people caught on with our story is that we work with the fcc, cracking down on this to get exclusive data. and after recertifying, trying to call every one of the millions of people, like 18 million people. what they found was 41% of the people who were on the program were not eligible. so they -- >> that is unbelievable. >> that's a large number. sec was expecting 15%. >> we, the viewers, we are paying for that. >> yes. and it there is a good reason to have the program. >> 41%. what happens to the 41%? do they keep the phones? >> no. they are removed from the program. and this process will continue throughout the year. and there will be more people removed from the program as well. so it is not over. >> the bigger picture here to me is not just about phones. 192 straight months of people getting on disability. food stamp usage has doubled in a decade. these programs help a ton of people. but you are delusional,
delusional, if you don't think there are some people gaining the system. and your study shows at least on this level there are a lot of people out there, the billionaire this morning on kwauk box says, if you can get something for free by filling out a form, why wouldn't you? >> and one other point. some people might have lied or misrepresented what they are doing. companies as well, the companies that participate in the program include at&t within verizon, track phone, sprint, some of biggest in the country. there are allegations of potential fraud here. >> by them? >> by the fcc. the fcc investigating allegations of fraud and we will have to see what happens with the investigation. >> when you find out more, come on and we will talk about it again. that would be fantastic to continue that story. thank you so much, spencer. >> still ahead on "street signs," a double disaster da jour. one in the sky and one in the seat. >> and a frequent flyer cliff is coming. how to protect your precious points, ahead.
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coming up on closing bell, the nation's biggest banks have been hitting new highs today. find out if the financials still have more room to rally at this point. also, cisco earnings will be out right after the bell rings tonight. president obama's proposing to raise the minimum wage to $9. but we will hear from somebody who says that will destroy jobs. not create them. we have both sides of that always contentious debate, still ahead. maria and i look forward to seeing you at the top of the hour from post 9 at the new york stock exchange. see you here, brian. >> we certainly will, bill. thank you. major de jour disaster. let's bring in herb with reasons why. >> this is momentum in reverse type of story. this stock was going up strongly. i mentioned it as a risky stock
going back september 17 of last year. stock went way back up and now is back where it was as a potentially risky stock because it was so high valued. also, analysts were expecting from the cloud, so the story continues to evolve for this wp co. and you know, it has been an interesting company. done a great job in what some might consider c a commodity business, including in the cloud space, amazon.com. >> i understand the ceo said something very interesting. >> at the top of the call he said, this could be a transformational year. then he said, they have the foundation in place for, and he said, massive growth ahead. when you hear ceos say, massive growth ahead within you want to say, that's a strong statement. and the question is when. when is that -- and he points out, this could take some time. so is this one of those stories? >> multiyear, multiquarter?
>> margins went up. now remember, when amazon add similar situation, margins went up, growth fail, amazon stock popped. this stock didn't. but the -- wait a minute, wait a minute. margin growth here is the result of fewer new full-time employees added. so they are able to pull that lever in this case. >> let's's be honest. amazon, i think we realize, with a stock unto itself. they don't with stand valuations that are astronomical, concerns about margins. >> for now. for now pz snz. >> amazon is lebron james stocks. >> thank you very much, herb. in the meantime another disaster, the carnival triumph cruise ship. it is slow to be tugged back to shore. future sailings called off. carnival taking a hit, as you
can i math p can imagine. janet, what have you got? >> there are 12 cancelled cruises on triumph. first they said they would cancel two. now there is 14 total. that takes triumph out of service until may, april. it comes amid a coast guard investigation into the fire that hobbled the cruise ship. it'll be here this time tomorrow. it is about 120 miles away. it is under tow. this is now the fourth day these 4200 passengers and crews have been without adequate food, toilet facility, air conditioning. you name it. they've been through the ringer. what we are seeing, people are coming to mobile. even though carnival says it'll get people home, fly them out of here. we have family members who aren't waiting for that. they can come here to take their loved ones home. and late this afternoon, we are also hearing they will set up triage tent right outside of
where triumph will be docking so if people need medical services, they will be available to them. >> hopefully they get that situation taken care of quickly. a judge is missing a key group of plaintiffs. let's get 20 kayla to find out more. >> a lawsuit dismissed by the southern district, claiming facebook miss handled their ipo. there are two batches of cases. one is again the company, the other is against managers and ceo mark zuckerberg. the latter claim is being dismissed today. that could be positive for the outcome of the other case as we approach the end of the lawsuits. the lawsuit at issue claiming that facebook was selective in disclosing negative information about its business. the judge concluding that facebook did make extensive warnings in document and courts unanimously agreed that internal projections at a company are not material to investors.
the court following lead of the sec in saying it is not required for this type of forward looking information to be included in a company's filing. for its part a facebook spoerk spokesperson said we are pleased. >> thank you, kayla. is travel in the skies more your thing? will frequent flyers rejoice or mourn? something, because it is looking more and more like us airways and american airlines merger will happen. but what does that mean for your miles in brian kelly is here. the founder of the website. and i asked you a moment ago, so how many points do you have? he said, that's a very personal question. i will ask you again on air. but i would like to know, we are facing a points cliff. what do we tell people who have points and don't know what will happen. >> everything is fine right now. even if the merge engoes through, which we should find out about in the feks tin the n days, nothing will happen.
don't liquidate miles for magazines or anything like that. i think american airlines flyers will gain a lot. they will have opportunities for flights. >> you say don't panic, don't liquidate your miles. but isn't there a cliff at the end of the month with regard to elite status. >>'s leet >> well, if you didn' your elite status last month, there is nothing you can do now. march 1st is the airlines -- >> what you are giggling about? >> not that elite status matters the way it once did. >> i disagree. there are so many ways to get it through credit cards. but top tier eelite status is still -- >> it is more common now. do airline mergers make it worse or better? they will have more power to raise things up. you won't have as much competition to find a better
program. >> true. with more elite flyers, inevitableably, they will trim routes as they try to become profitable. the upgrade may still be hard it get but i don't take the dooms day approach. >> i have lot of points, can never find a flight to use them on. thank you so much, brian kelly. >> forget roses. we have got a better valentine that truly wreaks romance. >> and building confusion, we're decoding housing's mixed messages. >> coming up on the closing bell, an exclusive interview with that guy, john chambers. that's a market mover, folks. you will want it tune in. that at 4:00 p.m. eastern. we're back after this. ind the ss to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore?
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well, did the dow is currently down by about 61 points. it is losing steam here late in the trading day. earlier on in the day it was only 1.4% away from its all-time closing high. as we said earlier, the slow and steady wins the race, but clearly it's now down. >> the s&p can't get away from 1517. >> i know. >> 1517. >> sitting on that mark for days. >> all right. this morning on "squawk box, sam zell was talking housing. here's what he said. >> there was a headline yesterday. 88% of the markets are improved.
well, that's an interesting statistic for a headline, but is it relevant? i mean, 1% here ashes quarter percent. doesn't make much sense. what you have i think is this giant cheering section saying if we cheer loud enough the housing scenario will improve, and the answer is maybe. >> he was, of course, talking about all those numbers being thrown around, and maybe getting a little dig in at the media. listen. there are a lot of numbers out there, and it gets worse in the next couple of weeks. look at that. we'll be bombarded with housing data next week. home builder sentiment. housing starts, existing home sales. fast forward a week, case shiller home prices, new home sales, pending home sales. gives us a lot to talk about, but good grief, mandy. >> good grief. what's the report to get a good read on the housing market? joining us is ken rosen and our
very own diana olick. ken, what do you like at? >> four numbers i look at. housing starts is the number one most important one. existing home sales and new home sales are also very important, and then the inventory of unsold houses is another very important measure and finally, of course, prices, and all those indicators are up substantially year over year. nowhere near full recovery. definitely moving in the right direction, have been for 18 months, and my guess is this is sustainable for a long period of time. >> what's the least important piece of data? >> the mortgage application data. that's a very volatile week to week and every monthly numbers to be looked at askance. a lot of seasonal and i always look at year over year numbers as a much smoother series. the month-to-month judgments jump all over the place and don't take any month change very seriously because weather conditions, for example, the snow storm affected a large part
of the population that we had last month so the march numbers will be distorted. >> diana, this is your beat, right? you know tons -- what do you look at, what's important and what doesn't matter? >> this is all i do, every day all day look at the numbers, and you put out numbers we're getting out next week. that's not the half of it, the different agencies and reports that come out on invin industries and banking and mortgage. >> wow. >> it goes on and on. >> what is so important to me i think is i know the mortgage applications data varies week to week, but if you look at a three-week or one-month running application mortgage applications are very important because it tells us who is buying mortgages which tells us about how regular americans are not getting into this market but investors are. most important to me, hands down, inventories, and that's the big story today, is inventories are dropping not in the boom-to-bump markets but across the country. we have to watch these inventories because if they get too low we'll see price overheating which is going to be a problem in a lot of cases as
new home buyers try to get into this market and investors rule the market. again, inventories, prices are very difficult. i don't like looking at prices especially month to month because when we give the national prices, what does that mean to every local market? you have to go market to market, and i think it's a great segment because there are so many numbers out there, and to get an overall idea of the housing market recovery you have to go local and you have to look at the inventories. >> absolutely. even anecdotally, i'm hearing a lot of my friends saying the inventory is so low, hard to find an apartment in their particular market. ken, you said we're still a long way from being fully recovered in the housing market. when do you think we'll be fully recovered, and what's the benchmark for being fully recovered? we don't want to be back at the peak when it was crazy and people were using their houses like an atm. >> prices are 22% below their peek level nationally and they have to come back another 15%, 20% so that will take three more
years. i would say for housing starts the normal single family numbers should be 1.1 million and we're going to be at 700,000 in 2013. again, three, four more years. i would say that multi-family, rental apartments, by the way, are already past full recovery. we're going a surge in rents everywhere around the country and new housing production is up 34% year over year for mental housing. rental housing in most markets is fully recovered. it's the for sale housing market. >> if i could jump in and agree with you. rental apartments, big numbers, household formation and homeownership rates to add another stat in there because that tells us which households are getting formed, rental o regular homes and all the move has been in rental apartments which tells us so much about what you're talking about, the heating up in the multi-family sectors. >> call me when mortgages go back to 6% and 7%, and it will at some point. no one is going to move.
>> i think the biggest risk for the market is normalization of the ten-year bond which affects mortgage rates. mortgage rates today in the mid-30-3-s are at record lows. up a little bit in the last two months but near record lows so anyone who wants to buy a house to live in now couldn't be a better time. if you can get the credit, couldn't be a better time. >> that's a big if if you can get the credit, not the rates so much as availability in credit. >> we have to leave it there. wise words from diana and ken. thank you very much. meantime, stocks are drifting lower right now. the nasdaq is still holding in the green, but coming up, the one place where love stings literally.